Correlation Between Western Copper and IMetal Resources
Can any of the company-specific risk be diversified away by investing in both Western Copper and IMetal Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Western Copper and IMetal Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Copper and and iMetal Resources, you can compare the effects of market volatilities on Western Copper and IMetal Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Western Copper with a short position of IMetal Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and IMetal Resources.
Diversification Opportunities for Western Copper and IMetal Resources
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and IMetal is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and iMetal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iMetal Resources and Western Copper is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Western Copper and are associated (or correlated) with IMetal Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iMetal Resources has no effect on the direction of Western Copper i.e., Western Copper and IMetal Resources go up and down completely randomly.
Pair Corralation between Western Copper and IMetal Resources
Assuming the 90 days trading horizon Western Copper and is expected to generate 1.37 times more return on investment than IMetal Resources. However, Western Copper is 1.37 times more volatile than iMetal Resources. It trades about 0.03 of its potential returns per unit of risk. iMetal Resources is currently generating about -0.24 per unit of risk. If you would invest 159.00 in Western Copper and on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Western Copper and or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. iMetal Resources
Performance |
| Timeline |
| Western Copper |
| iMetal Resources |
Western Copper and IMetal Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and IMetal Resources
The main advantage of trading using opposite Western Copper and IMetal Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, IMetal Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IMetal Resources will offset losses from the drop in IMetal Resources' long position.| Western Copper vs. First Majestic Silver | Western Copper vs. Ivanhoe Energy | Western Copper vs. Orezone Gold Corp | Western Copper vs. Faraday Copper Corp |
| IMetal Resources vs. First Majestic Silver | IMetal Resources vs. Ivanhoe Energy | IMetal Resources vs. Orezone Gold Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.
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